Commentary on how China and the world are adapting to each other -- or not.

August 31, 2011

Baotou Bound

In mid-August I visited Baotou, a medium-sized city in Inner Mongolia. Baotou is the center of China's rare earths (RE) industry; and given that China produces over 95% of the world's rare earths, Baotou is center of the global rare earths industry.

I think by now most folks have heard of rare earths simply because of the number of news stories about them. RE's are 17 element minerals who are used in a variety of technologies, from batteries to missiles to computer screens. RE's typically are just a tiny fraction of the cost of a product, but in some instances, such as wind turbines, they constitute a large portion of the production cost. RE's are far more important their $2 billion in annual sales would suggest. The US and others used to dominate RE production, but they gradually withdrew from the sector because of the high costs of mining and more stringent environmental standards. That left RE's to China, and over the past decade China has been trying to restructure the sector in order to deal with the pollution, make the sector more efficient and technologically sophisticated, and use domination of RE production to help develop downstream sectors that depend on rare earths, such as advanced magnets.

While in Baotou, I visited the main company that mines and processes RE's, Baogang Rare Earths High-Tech Co., and talked with some local officials and experts. As luck would have it, on my first day in Baotou there was a national Rare Earths Forum being held at the Shangri-La Hotel. So I crashed the party and met a few people, though I was not allowed to sit in the formal meetings because they were closed to foreigners.

Funnest of all, I visited the Baiyun Ebo Mine, 180 kilometers north of Baotou, close to the border with Outer Mogolia, or as we know it, the Republic of Mongolia. Along the way, we came across a massive number of hot air balloons that were all trying to glide past one of the oldest sections of the Great Wall, built about 2000 years ago.

Once at Baiyun I got to see the two main open-pit mines from which they mainly get iron ore and rare earths. I wasn't allowed to take pictures of the mine, but I was permitted to take a few shots of the giant trucks that rumble up and down the mine roads carrying the ore.

The tires alone were twice my size, giving the impression that I'm not very tall.

I have to say I was extremely impressed by the high esteem in which everyone in Baotou holds Cheng-ji-si-han, or as you know him, Gengis Khan, who created an empire that stretched from Mongolia across China to the south and toward Europe to the west.I've heard that in the first few decades after "Liberation" in 1949 Chinese spoke of Mao Zedong in equally glowing terms, but I had never witnessed that myself, or at least seen it so universally. You could say Gengis Khan "is the man," but he's revered almost as a god.

China being what it is -- a capitalist socialist mecca -- it shouldn't have come as a surprise that Gengis Khan has been turned into essentially a brand, with business upon business taking advantage. I had dinner at a Gengis Khan theatre restaurant pavillion that made me think I was visiting Busch Gardens.

There you could eat in a yurt, with all the modern conveniences, or in a yurt-shaped room in the main building. In either case, you could have local ladies join your party for singing and dancing (which I avoided, in order to not hurt the feelings of the Inner Mongolian people because of my horrific voice). It was more fun watching others.

I did learn a lot about rare earths and will be writing about them before too long, but just as important, I had a heck of a lot fun in Baotou, a town with people that deserves our admiration.